Nokia makes bid for Comptel to boost its software business

Nokia is looking for new markets as network equipment becomes increasingly commoditized

Network equipment vendor Nokia wants to buy a software company that helps customers make do with less hardware.

The Finnish networking giant competes with the likes of Ericsson, Huawei Technologies, and Cisco Systems to sell networking equipment, software, and services to telecommunications operators and large enterprises.

On Thursday, it offered to buy Finnish neighbor Comptel, which develops software to help network operators manage their networks and deliver additional services.

Nokia said the deal, valuing Comptel at around €347 million (US$370 million) would help it toward its goal of building a standalone software business.

The bid is a logical move, said Sylvain Fabre, a research director at Gartner: "The days of proprietary infrastructure from network equipment providers are numbered. Virtualized infrastructure will increasingly be procurable from alternative vendors, so focusing on software and applications for telecommunications functions is the way forward for any large vendor that seeks longevity."

A growing part of Comptel's business is network function virtualization (NFV), which allows operators to repurpose and reconfigure existing equipment to perform new functions, rather than having to buy additional new hardware.

The company's Flowone software, for example, lets operators orchestrate computing, storage, and network resources to meet the requirements of customer care, billing, order management, and other business systems. Comptel expects all major operators will have to adopt such orchestration tools in the near future.

Comptel has other strings to its bow: It also offers analytics for crunching network data, a system for helping operators decide how to charge for their services, and tools to help operators offer personalized services for consumers.

If Nokia's bid is successful, Comptel will remain a separate legal entity but will operate as part of Nokia’s Application and Analytics business group. The group develops business support systems (BSS), operations support systems (OSS), service delivery platforms, analytics and other tools for security and the internet of things, and competes with the likes of Amdocs, IBM, and Oracle.

It's not Nokia's first acquisition in the area of software-controlled networks: Last December, it bought Deepfield, a company that allows operators to rapidly reconfigure their networks through software to perform tasks such as diverting traffic from DDoS (distributed denial of service) attacks.